The market is going up this year, but there are still plenty of investments that didn’t get the memo. Less than 13% of the market’s listed shares will have lost more than a third of their value by 2024. You can find good sales here if you know what to look for when an opportunity has fallen out of favor.
Sirius XM Holdings (NASDAQ: SIRI), Lululemon Athletica (NASDAQ: LULU)And Roku (NASDAQ: ROKU) are all down at least 39% this year. They are for sale. Let’s take a look at the reasons why I think these are some of the names in the markdown bin worth taking to the checkout.
1. Sirius XM — down 51%
Most investors probably haven’t given Sirius XM much thought lately. The country’s only satellite radio presence was a battleground a decade ago, but now it’s just another troubled media share.
This has been a slow fade for Sirius XM. Organic sales growth has been in single-digit growth for almost a decade, including a decline to a 0.6% decline in 2023. The stock has halved this year, even as it has returned to marginal sales growth in the past two quarters. .
Sirius XM continues to entertain 33 million subscribers in the new normal. As a largely in-car platform, engagement should increase this summer as road trips are expected to see a big jump from last year. People are also being called back to work in the office, and satellite radio is making the commute more enjoyable with its premium offering.
This is not a stock that deserves to be trading at an 11-year low this month. Sirius XM is consistently profitable and currently trades for just 8 times earnings. To make matters worse, Sirius XM has 44% fewer shares outstanding than the last time it traded this low. Yes, Sirius XM has turned its massive free cash flow over the years into a means to aggressively buy back its stock. There’s also a 4% yield on the stock, which rewards the patient as he tries to return to growth.
2. Lululemon – down 39%
Slowing growth is also weighing on athleisure brand Lululemon Athletica. The company known for its luxury yoga apparel is also not growing as quickly as in the recent past, but is still posting the kind of annualized profits that most apparel companies would envy.
Lululemon posted net sales growth of 10% for the latest fiscal quarter, up from 11% at constant exchange rates. A mere 3% increase in Comps in the Americas is problematic, but overall growth was boosted to double-digit gains after a 35% jump in international sales on a 25% increase in Comps.
The stock now trades for 22 times this year’s expected earnings. Like shoppers at a Lululemon store, you don’t expect to get something this cheap for a stock that has historically traded at a much higher premium on the market. Lululemon itself seems to think this is a good time to buy. The board approved another $1 billion in buybacks earlier this month.
3. Roku – down 41%
Some price cuts are just mean. Roku isn’t fading as a leader in streaming operating systems. As many as 81.6 million households continue to use the Roku remote, spending an average of four hours per day streaming content on their TV.
Roku has fallen for a number of reasons. The economy more than doubled last year, so expectations are certainly higher heading into 2024. The economy also continues to lose money, even as deficits start to narrow. There’s also the fear of a new competitor, with the nation’s largest brick-and-mortar retailer buying a marginal player in Roku’s market.
They all seem like short-term problems. Roku’s audience is still growing, up 14% in the past year. After a brief setback, the average turnover per user is also starting to increase again. If you believe advertisers and media giants will continue to shift their spend to streaming TV over legacy networks, then it’s probably worth considering buying a top dog if it’s in the doghouse.
Should You Invest $1,000 in Sirius XM Now?
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Rick Munarriz has positions in Roku. The Motley Fool has positions in and recommends Lululemon Athletica and Roku. The Motley Fool has a disclosure policy.
Do you have $1,000? 3 Stocks to Buy Now While They’re on Sale was originally published by The Motley Fool
